Gold Futures Recover as USD Falls

by RJOF Editorial Team

October 17, 2016 7:12AM CDT

Gold futures are recovering after a rocky week of mid-October trading, as prices wavered on economic data and speculation over the Federal Reserve’s plan for interest rates at its next meeting. Lower levels in U.S. dollar index futures are also boosting prices in the metals sector of commodities futures trading.

The December contract in gold futures was up .07 percent at $1,256.4 an ounce at the start of the week. Meanwhile, the December contract in U.S. dollar index futures was down .11 percent at 97.885 on Monday.

Last week, gold futures prices dropped to a new five-month low as the U.S. dollar index futures surged higher. The December gold futures contract settled lower on Friday after Fed Chair Janet Yellen said an easy interest rate stance could increase the risk of financial instability or undermine price stability.

Earlier in the week, minutes from the central bank’s September meeting showed that several voting members of the policy committee said a rate increase would be needed in the near future, but proof of continued progress toward full employment and a faster rate of inflation is needed.

In other news for the gold futures markets, the Intercontinental Exchange (ICE) on Monday said it would launch a London gold daily futures contract in February 2017. Earlier this year, the London Metal Exchange (LME) said it was planning to launch spot and futures contracts for gold and silver in the first half of 2017

Commodities futures markets have a full economic calendar to absorb this week. On Monday, September Industrial Production rose 0.1 percent compared to most economists’ expectations of a 0.2 percent increase, boosted by construction supplies. Meanwhile, Capacity Utilization for the same month rose to 75.4 percent, one tick higher. The slight increase is still below a long-term average of 80 percent.

Tuesday brings the September Consumer Price Index, which is a key report for many commodities futures markets participants as the Federal Reserve’s next interest rate hike remains in focus. On Wednesday, Housing Starts and Building Permits for the same month are due for release. On Thursday, the October Philadelphia Fed index is due, as well as Existing Home Sales and Leading Indicators reports for September.

Overseas, Chinese GDP, retail sales and industrial profits are all scheduled for release on Wednesday. Last week, the U.S. equities futures markets were hit by a surprise fall in Chinese exports.

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.